Assets Versus Medicaid Eligibility

Trust fundMedicaid is a needs-based government program administered by the states, with income and asset limitations that apply before you can qualify for the program’s assistance.

To prevent individuals from just making quick transfers of their property, either outright or in a trust, to qualify for the Medicaid program, there’s a penalty period imposed on transfers made within five years of applying for Medicaid.

The penalty is a period of time, during which the applicant doesn’t get Medicaid benefits after otherwise qualifying because of the amount transferred within the prior five-year period. The penalty period is determined by dividing the amount transferred by the monthly penalty divisor.

In the same vein, if a person creates a trust using some of his or her own funds, where the individual is the sole beneficiary or one beneficiary in a group of beneficiaries, the trust may be considered an available resource for purposes of determining eligibility for Medicaid. It will be counted as an asset when determining eligibility for the program.

This is especially true if the trust can be revoked. A revocable trust and its assets can be “pulled back” into the name of the Medicaid applicant, and be counted as his or her asset for eligibility purposes.

If the trust is created by a third party and with third-party funds for the benefit of the Medicaid applicant, the answer would depend on the specific terms of the trust and whether the settlor (the person who created the trust) is the spouse of the Medicaid applicant.

This is because income and asset limitations are imposed on the “community spouse” (the spouse still living at home), in order for the applicant spouse to qualify for Medicaid.

The state government may also have the right of recovery against the estate of a deceased Medicaid recipient for Medicaid benefits paid to that person during his or her lifetime. This means if the deceased Medicaid recipient's estate has a claim to assets, either outright or in a trust, the state may be able to recover some of those assets.

Reference: nj.com (December 26, 2017) “How trusts fit in with Medicaid planning”


Like this article?

Share on facebook
Share on Facebook
Share on twitter
Share on Twitter
Share on linkedin
Share on Linkdin
Share on pinterest
Share on Pinterest

Leave a comment


We have a LOT more where that came from!

We hate spam too. We will never share or sell your information.

Call Now ButtonCall Us Now https://jsfiddle.net/7h5246b8/

Request a free consultation

We hate spam too. We will never share or sell your information.

We've been putting together as many resources as possible so that we can continue to help:

  • If you’re a current client with a signing appointment or a prospective client with a consultation and would prefer that meeting take place in your own home, we can accomplish that with a little bit of pre-planning on our part and with the addition of a laptop, smartphone, tablet or other computer in your home to facilitate this virtual meeting. For those of you that need to sign legal documents, that too can be accomplished with the use of a webcam (FaceTime etc.), so that we can witness and electronically notarize all of your important legal documents.
  • We launched the rollout of our on-demand webinar early so that new clients and our allied professionals can view the important component parts of ‘an estate plan that works’ at their convenience.  That is available on our website.
  • Live video workshops will be produced as quickly as possible and certainly ahead of our previous schedule; we will keep you posted as these events become available. Given the ‘boutique’ nature of the firm, we rarely have more than ten people in our office including team members at any one time. During this period of ‘social distancing,’ we promise to have no more than 8 people at any time.   This allows us to comply with the Governor’s directive to limit in-person gatherings.
  • The best way to communicate with us is still by phone during regular office hours of 8:30 to 5:00, Monday through Friday, or, you can email any of our team members (that is, their first name followed by @zarembalaw.com).  We will respond to these emails as quickly as possible.
  • Please continue to follow the directives of our local, state, and federal agencies. For your health and in consideration of our team who is assisting you, if you’ve scheduled an office appointment or planned to drop off paperwork and are experiencing a fever, dry cough, or shortness of breath, please contact your primary care doctor for guidance and then our office to reschedule.

Thank you, Walt and the Zaremba Team

Update to our Process

The unprecedented coronavirus pandemic has taken our entire country by surprise. We understand how difficult this time is for America’s businesses and families.  However, we believe it is vitally important that we make every effort possible to continue to offer solutions that avoid disrupting our important partnership with you, your family and friends.  As you know, estate planning is not something that should wait for a more convenient time, therefore the opportunity to address your important goals both during and after this crisis should not wait.  To that end, we have added the option of a ‘virtual consultation’ to our office process.  You will now have a choice of either meeting with us in our office or in the comfort of your own home.